Cutting Credit Card Costs on Your Ecommerce Site

Adam:
Welcome to Woo BizChat. Hello everybody, this is Adam Weeks, and I am not joined by Emma Young today. I am joined by—I’ve got Bob here. Bob, you are not Emma Young.

BobWP:
No, I’m not. Either you’re very glad about that, or I hope you’re glad about it in the sense that you can see me.

Adam:
Yes, I am glad that you are here. Sad that Emma’s not. Hopefully, she’ll be able to join us next time. She’s got some big news I hear that’s coming in the wings. But until then, Bob, it’s you and me with Konrad. Konrad, we are excited to have you join us for this episode of Woo BizChat. We are talking about the war against credit cards—or at least, that’s how I’m thinking of this. This is kind of exciting. Konrad, welcome to Woo BizChat. Would you mind introducing yourself and letting us know a little bit about who you are and what you do in this great big world of WooCommerce?

Konrad:
Yes, thanks, Adam. It’s a pleasure to be on the show. Thank you very much for having me.

And yeah, who am I? I’m someone who spent most of his life in banks, consulting banks, and also consulting a lot of different payment providers out there. Since I’ve done that, I’ve come to at some point in my life found a business that founded a new payment method because I was doing different things here and there. Among other things, I’ve written a study about the European payments market for Olaf Scholz, actually, when he was head of the finance ministry. That’s when I found that this market is a bit interesting in terms of how many different players are involved and how this whole thing works.

Then I’ve done a couple of other things, like defining the accounts and card strategy for a third of the German bank accounts here in this country. That all led me to believe that it can be done a little bit better, and that’s why, at the end of the day, I decided to change this market and to go on this, if you like, war on credit cards. But to be honest, all payment methods rely on the same systems. So at the end of the day, we’re looking at the same thing in all different areas and countries, by the way.

Adam:
Okay, yeah, thank you for that intro. It’s good to have you in our ecosystem.

So what I want to get to is this topic today. Our theme is: how do we cut the banks and credit card companies out of the profit for someone who is building a shop on the internet in WooCommerce?

I’d like to start off with, if you could quickly paint a picture of what a merchant selling something might experience. We could come up with a fictional store unless you have a more specific story. What is someone experiencing as far as what kind of profit is getting cut out of their business today, especially in the US and in Europe?

Konrad:
Yes. So if you’re building on WooCommerce or on any other platform, to be fair, you would usually need a payment service provider to integrate any of the different payment methods out there. So you would need to talk to the PayPals, to the Stripes, to the Ayden and so on of this world—and also Woo Payments, by the way. There’s also a WooCommerce-specific integration at times to talk to them and ask them, “Well, please take me, and if you do so, please tell me which different payment methods you have.”

It could be Klarna, PayPal, cards. And there are some funny local payment methods as well. For instance, in Sweden, they have Swish. In Italy, they would have something like Satispay. In Spain, they would have Bizum. In Switzerland, there’s Twint, and so on and so forth. So it is a bit endless in terms of what’s out there.

Then you need to decide which payment methods you want on your platform.

That’s number one. And then, of course, if you are not selling just in one country but in different countries, you’d need to ask yourself the question: which payment methods are really relevant in these different markets? So you would have to set different settings for different markets and take a good decision on what works for the customers that you’re having.

That is sort of the state of the art. That means there’s one player who’s taking care of that to a certain degree because, at the end of the day, as a merchant yourself, you would need to make the decision about which methods to show and which not to show in certain geographies. So if you look at it from an international point of view, it’ll always be rather tricky. And as a merchant itself, you would always need to get involved in the decision-making there.

That would be the first step. Once you’re set up there, you’re pretty much ready to go. Usually, you would need to go through a KYB process, so your business would be checked in terms of what’s going on there, pretty much. But it’s a legal requirement. And once you’ve done that, you are ready to take payments—if you are successful, obviously, in all the steps.

Adam:
Got it. Alright. Thank you for laying out that this is a large and somewhat confusing landscape. Is that correct and accurate? How do we navigate this?

So over the course of our conversation, I’m hoping you can help break this down—like, alright, this is where we’re at, this is where we’re going, and then what you see as the solution. And I think you’re probably biased towards that solution, and that’s okay. We’re going to lean into that.

For a merchant today—and I’m going to let Bob ask the next question, but I’m excited about this—for a merchant today, how much are the credit card companies or the banks removing from the profit of someone who has an online store?

Konrad:
So let’s maybe… let me put a number out there because that’s most interesting at the end of the day, but I’d have to extend on that a little bit. But yeah, let’s put a number on it.

So the standard pricing from PayPal or Klarna is around 3% in a fee applied to any shopping cart. So 3% of your shopping cart is gone immediately, basically, if you like, right? Just for the payment method itself. And then they put a fixed pricing on top of that, so you’re also being charged a fixed amount.

Those two things together, for instance, on a smaller shopping cart—let’s say 50 or 60 euros—could also end up being up to 4% of what you’re selling on your platform. And that is really substantial. Now think about you’re maybe not selling your own goods and services, but maybe you’re a marketplace. Now think about, on that marketplace, you make, let’s say, 5–10% on a shopping cart. Well then, 3–4% is really substantial from whatever you are making on that platform.

Adam:
That’s a big chunk.

Konrad:
And I have to extend, of course, a little bit because—sorry to deep-dive here a little bit—but I have to extend it a little bit because there’s, of course, big variation between who pays what.

The more you make, the less you pay, of course. So once you really start making a bigger revenue on your shop, you will definitely pay less. But it will never be something where you would say it’s insignificant—that I can promise you. And especially if you’re just starting out, you will be squeezed the most. So it definitely hurts the small businesses the most.

BobWP:
So I think this payment thing is just mind-boggling, and sometimes it makes me happy that I actually don’t have a store for that very reason. But what is your response to all this? I mean, you are on a mission, obviously, and as Adam said in the title, the war against credit cards. Where are you coming from into the picture as far as what you think is the lead into some kind of solution on what you’re doing?

Konrad:
There are two ways to look at it. One is the shop software—WooCommerce makes a difference, so that’s important.

And the other thing is, let’s first take a look at the overall market setup and how we can change that market setup.

In the current market setup, whenever payment happens, you usually have really a bunch of players involved in a single transaction. So you would have usually the credit cards of this world or debit cards—it doesn’t really matter. So the Visa and MasterCard of this world, they are usually involved, and they get a fee.

And then I’ve mentioned earlier the payment service providers, the Stripes of this world, let’s say—they’re involved, and they get a fee for it. And then there are sometimes even wallets involved, so Apple, Google, or the card then—and they also get a fee for it.

And it doesn’t stop there. There are banks involved, of course, on the paying side—they issue cards, they get a fee for that. And then there are obviously banks on the receiving end involved.

And I could go on about this, but the main point is: there are a lot of different players involved, and they all charge different fees, and that piles up. And that’s why it’s so expensive.

But there’s a reason why it’s like that. And the reason is that it’s a system that’s built up over years and years and years. I mean, we’ve been using these cards now for about 70 years, and it was really a great idea back then—using a plastic card to make payments anywhere in the world. And it still is, to some degree.

But we don’t really rely on doing it like that anymore. Because on the one side, what we can do is we can bring private customers into an app with their bank accounts to pay, and we can have, on the other side, merchants that directly integrate with the payment method without having all these other players involved.

So WooCommerce, fortunately, allows you to do that very easily because it’s an open platform. So what we, for instance, have done is we’ve built our own plugin on WooCommerce, and the only thing a merchant needs to do is download our plugin. In this case, they are pretty much ready to go to accept payments. And that’s, in our opinion, how it should be—not having all these other players bulging in the middle.

Adam:
Got it. That’s helpful. Thank you.

I’d like to narrow into a scenario. A number of people who are listening to this podcast—they’re in WooCommerce, and they have a client perhaps that—let’s just make up something—Let’s say someone, you have a client that is selling fancy—they’ve got a T-shirt shop. They had an idea, and they had some really clever things for selling T-shirts.

To break down specifically: what is currently—if they say, “Yeah, this is just the cost of doing business. I have my T-shirts, I’ve got a website through WooCommerce, and then someone goes in, they make a payment, and that’s just what life is. It’s not great, but it’s fine. I don’t need to change anything. My business works.”

What would you say to that person or the person running that website?

Konrad:
Well, that really makes me feel uneasy because, personally, I have to say I am actually on a mission. So, unfortunately, I do this with a lot of passion.

And the reason for it is that it’s simply unnecessary to have all these companies in between. And in the end, we all suffer from it.

I mean, if you think about it, people are going into bonus programs, benefit programs, coupons, and the like, where they maybe, on average, get 0.5% back, and they make a huge effort to get that. Now think about these payment fees maybe from that perspective a little bit because they are much higher than what you would usually get from a benefits program, right? Your 10th coffee on the house, let’s say, for instance—that’s much less than what we could save from these fees.

And we’re all paying them. So in cards or online payments, there’s a quite direct relation between payment and fee.

But it doesn’t even stop there. Even when we talk about cash—even there, we are all paying the fees for it. We’re all paying the money to provide cash. We all pay the money to recycle cash. So if a bill is broken, obviously the central bank needs to print a new one, and so on.

So I’m looking at it from this perspective: we are all paying it—the merchants and the customers alike—because at the end of the day, who provides the money to pay the merchant? Well, the end customer.

So I really feel like this is something we should not be doing as a society overall. I don’t really see the point in why we do it.

And that’s why I can only say: well, don’t give up like that. Don’t just accept things the way they are, because it can be done in a better way.

Adam:
And so, to be specific, what would it look like to change? Because change is always scary. I know what I’m doing now.

How have you seen the change work well for others? And the reason why I want to lean into this a bit is you’ve got your website set up, everything’s working fine in WooCommerce, and you’re accepting credit card payments or whatever it is you’re doing. I can imagine that a store owner would be nervous to now do something different.

Is there a world where you’re offering more than one solution? Or walk us through that changing process—of currently what they’re doing now to maybe the solution that you’re offering—and be specific. I’m good with FLIZpay. Yeah, let’s get into that a little bit.

Konrad:
Yeah, just to prepare points.

And just to mention, the company we founded is called FLIZpay, and it is in addition to what you’re offering right now. So if you have a payment service provider and you’re offering, let’s say, five different payment methods at the moment, you can download our plugin, and it’ll be an additional payment method next to what you’re offering already.

So it would not be a substitution—you don’t have to get rid of your current setup. Because at the end of the day, I’m pretty sure a lot of shops do accept international payments anyways, and we’re currently still local here in Germany. So from that perspective, it’s an addition.

And what is the exact process? Well, the exact process would be you would go to your web presentment page, you would look for our plugin, you would download it, and then you would need to create an account on our website—flisspay.de. Get your API key to connect the plugin to our service.

And when that’s done, you are pretty much ready to go.

Of course, you can do some configurations, such as which payment method should be number one on the list, or which text should be shown, or is there a logo—is there not a logo? I mean, there are a lot of decisions, and a lot of shops have different preferences for what they like in that checkout. But it is as simple as that.

BobWP:
Right now you’re strictly in Germany, right? What is your vision? What you just described sounds very easy for the user. Where are you heading with this from where you’re at now?

Konrad:
Yes. I think the current restriction on Germany is only temporary because we can do this on a European scale. And that is because the regulation or regulatory landscape in the European Union allows us to do so.

But that would be, currently at least, the guardrails or guiding rails that we would have on this project.

But to be fair, my point is always, once you’ve established something that works in one of the major markets—and now I’m saying Europe being one of the major markets—I’m a strong believer that it can work anywhere, and also regardless of the regulation.

Adam:
Do you have a timeline? How long do you think that might take to expand outside of Germany?

Konrad:
Outside of Germany, I would expect something between three and five years. So it definitely takes time to build this. And outside of the European Union, that is definitely something that is more of a long-term goal for us.

I mean, we’re talking about 550 million people, roundabout, just in the Union. So it is a very big market.

Adam:
So, I’ll kind of just keep going on this idea of—we’ve got this T-shirt company, and they’re selling T-shirts, and they sell T-shirts in Germany.

Is there a way to designate it so in Germany you can pay with this solution but then just offer other solutions for other countries? Or how would that work today? How would a vendor look at that?

Konrad:
Yeah, that’s actually built-in with WooCommerce, so you can take care of which payment methods to show in which country with built-in features. You don’t really rely on anyone helping you with that.

And most of the shops already have a setup for it anyhow.

BobWP:
A lot of our listeners have clients, and then there’s a lot of them that are building stuff themselves—building apps or might have done other various payment plugins or integrations.

What did it take to actually build this, and what challenges are there in building something like this? They’re not necessarily wanting to do exactly what you’re doing, but at the same time, they might be thinking, wow, there must have been some real twists and turns along the way.

Konrad:
I think in WooCommerce, one challenge certainly is the wealth of different possibilities. So we’ve definitely had that happen to us as well here and there.

So one of the—I don’t want to say names, but there are other plugins out there that are in some cases quite famous, actually, and really, really successful. I mean, we’re talking about thousands and thousands and thousands of downloads and installations, just in one country. So we’re just talking about a country of 80 million here in Germany, just to give perspective on that.

And they would not be on the plugin store but heavily used, and they would still need taking care of from us. And that was quite frustrating starting out with the plugin because that meant we ran into compatibility issues in the very early days.

So that was definitely a challenge, and I would say it’s quite specific to the platform challenges overall in building the payment method itself.

And there are, of course, more. I’m not sure if you’re just referencing the WordPress world or also outside of it, but if you also want to go outside of that, one of the bigger challenges certainly for us is that you need to be connected to all the different banks out there in, now, one country.

And we’re talking about 1,450 independent banks—roundabout—changing every day, basically, because they’re all consolidating. So that’s a lot of connections, and that was certainly something that is quite intense for us to manage.

Yeah, I think those are two good examples of what’s one of the interesting challenges. I think apart from that, on building on WooCommerce, it wasn’t such a big challenge. I think it’s mostly the compatibility that is really a challenge in building anything.

Adam:
Corey Miller, a good friend, he talks about going farther together and partnerships.

And so my curiosity is: you’ve got this company started, who would you like to partner with? I guess, how do you think about partnerships? Is there an entity, a company, people that you would like to bring into your orbit to help with—I’m again being a little verbose with this war against credit cards—but how do you think about partnerships?

Konrad:
Well, I made this big speech earlier about, oh, we are not partnering with a lot of other firms.

So it is definitely a lot about not partnering for us because we bet a bank on it, to be honest. Because the more we bring in of the old, let’s say, the less it’ll make sense because, yeah, you would need to pay, for instance.

Or the easiest example would probably be—let’s say we partner with a payment service provider. Well, that’s quite nice because then people can just do one click, and we are one of the additional payment methods within the framework of the PSP in the way they integrate with the platform. Not that we need it, but it is quite nice, let’s say, right?

But they would then put, roundabout, 11 cents on every transaction, and that’s how it starts. So you would start talking about putting pieces and pieces and pieces on top of something again, and then you end up with the same thing.

So from that perspective, it’s not the first thing we are looking to. We’re looking more towards entities that are obviously—or companies that are actually selling something. That’s obviously more the kind of partnership we’re looking for.

I think I have to leave it at that.

Adam:
Got it. Yeah, no, partnerships are definitely—with that comes the baggage of what are they trying to do and aligned incentives.

What about with maybe the hosting companies or with other agencies, more along those lines of partnerships?

Konrad:
I think the incumbents, they’ve done a quite good job at taking up quite a few different tasks along the way of a payment.

So imagine you’re receiving a payment, but you need to split up that payment in your back office and make it go to different accounts. Now, for instance, some of the incumbents—or most of them—have taken care of that.

And that could be something that is quite interesting for us, especially in this stage, because it’s simply a necessity for some companies to have additional services at the back of a payment. And it is rather difficult for any company to do everything from the start.

So that is something that we’re interested in—additional services that make it easy for the merchants.

BobWP:
It’s a good example because partnerships aren’t so cut and dry. Some people think in this tunnel vision of what maybe a partnership is or not, and you give the scenario of truly—you’ve got a different way of viewing partnerships and how it affects your business.

And I think that more people need to hear that stuff, to realize that it’s not always—you just follow a certain step-by-step as a business to create partnerships.

And I’m sure Adam agrees in a sense because of what he deals with all the time. And then everybody has a certain view of what they consider a good partnership.

Adam:
Absolutely. So I’m curious about how you view the WooCommerce ecosystem and specifically your role in it.

We are, interestingly, geographically constrained right now in Germany, with plans to go out broader than that. What are your plans for the future of working in WooCommerce?

Konrad:
We are definitely married to WooCommerce, let’s say, in that sense, because it is one of the most relevant platforms out there, and that’s why it’s very important for us to be on that platform.

And from that perspective, we will always stay and be on WooCommerce. That’s a given.

In terms of what to develop further—well, you’re kind of lurking into the partnerships there again, are you?

BobWP:
He is sneaking that way.

Konrad:
I was just thinking about how there’s full payments, of course, and how that might be interesting.

Of course, at some point, we are going to expand our offering in terms of what our plugin can do, what you can do with it, how it interacts with your website, and all those things. But that’s it for the time being. There’s not much more.

BobWP:
In the WordPress space, they have WordCamps. Have you ever been to a WordCamp? And what other, specifically, conferences are you involved with, whether it’s in the WordPress space or even outside the WordPress space?

Konrad:
In the WordPress space, I’m just starting out, I would say. WordCamp—I’ve missed when I’ve heard about it. It was just shortly after, so that was a miss for me.

And it would’ve been actually easy to attend then. I’ve attended—it was just recently, right? So that was interesting.

It was very helpful for builders. I personally had to drop out at some point because I’m personally on the business side of things. But I think the business side of it makes a lot of sense.

And then, outside again of the WordPress and WooCommerce world—yes, of course, I do attend conferences. And there are very big conferences for payments specifically worldwide, in any country, everywhere.

And what value do I see in those? I think it always depends on what you’re looking for. I think you need to have a view on what you are interested in, which people you’d like to meet, and also put in some work yourself in terms of who you want to meet, what you want to talk to them about, and what you want to get out of it.

Adam:
Yeah, I think Bob and I—we’re planning on being at CloudFest in the spring, and that’s in your neck of the woods. Have you been to CloudFest before?

Konrad:
Not yet, but I’ve heard great things about it.

Adam:
Yeah, hopefully, we’ll get to make sure we can meet up there. That’d be fun. We come that way and maybe meet up in person.

So as we’re wrapping up things, I want to just come back to, again, this idea of that credit card and this current system we have. It’s about, what, 70 years old? It’s been in place a long time.

Do you think, from your optimistic standpoint, is it truly going to change? Are we going to see a shift in the industry?

Konrad:
You’re talking to the wrong guy, of course, in this case. My answer is resoundingly yes, of course. It cannot be another answer to the question. Of course.

But also, if you look at how things are developing—so I think you’ve mentioned it quite early on in the conversation—that also in other geographies, things have changed, and usually, there’s another change preceding change.

So my favorite example is always India, where they’ve introduced a payment system called UPI. And it’s a system that runs on instant payments, which means payments are being executed just in a couple of seconds. The money actually moves from account A to account B in a couple of seconds, which is different from what happens today.

Today, banks accumulate payments throughout a day, and then they execute so-called batches after a couple of hours—but sometimes also only the next day. So it kind of depends on when money actually moves from point A to point B.

And if you look at a change, or that particular change of regulation in that country and what happened there, then you will find it can have an immense change.

So what happened in India is that basically everyone jumped on the solutions that have been built on top of the regulatory change that came. And we’re talking about India, right? So we’re talking about millions and millions and millions of people that started using these apps to pay—and also merchants in the offline and the online world to accept these payment methods rather quickly, by the way.

And we now have exactly the same change here in the European Union. And we’ve seen some other countries—for instance, in Brazil—that also saw the same change and saw the full market basically switch from what’s been there in the past to what’s possible now with, well, sort of the future.

I mean, in the end, it’s technology and it’s a regulatory landscape that comes together and makes people drop the plastic and start using the other plastic, which is the phone, I guess. So yeah, I very much believe in that.

BobWP:
So do you think there are opportunities for other developers? What would your recommendation be, or what would be your best piece of advice?

Konrad:
I believe that, around this particular space of payments, there is a lot to build.

So, just one example: bills. Bills are simply a necessity. People need to get these bills, and someone needs to have a process to get bills from the businesses to the end customers. And at least here in this country, it’s not been done so well, especially in the offline world so far.

Which means you would need to get this piece of paper still, or if you wanted it digitally, you would have to give someone your email address—which is, of course, annoying if you’re standing in a shop.

If you take that as an example, you’ll find that as things move more to the phone or to an app, this can also simplify a lot of other processes around the payment itself. The payment may be at the core of things, but, for instance, the bill at the back of it still needs to get issued, and that could be done in a much easier way.

And since it’s such a big field that needs building, I very much believe—and that’s maybe where the partnerships that we’ve touched on earlier come in again—I don’t really believe that, in such a big space, one entity can really cover everything and anything. It’s simply impossible to build all of it, even after years and years.

So, I believe that yes, services that are very close to—well, in bigger terms, digitalized, but that would be too vague of a term. But this shift from everything sort of physical and offline to everything being online, on my phone, etc.—I think there’s a lot of opportunity to build around that.

Adam:
Fantastic. So what you’re saying is that the future is bright, and that we don’t have to be stuck with these incumbents, these monolithic banks that are taking chunks out of our business.

There are other ways, and you’re one of them leading the charge. But it’s neat to see that other countries, like India, have been successful and are moving in that direction.

As we wrap up, I was looking on your website, surfing—you are a surfer, or you go surfing. That’s kind of a neat origin story, that your founder, your team, kind of met up surfing.

Konrad:
Yeah, that’s always a good one because people ask me, “Well, where did you guys meet in this company?” And the answer is actually surfing—which is exactly what happened.

So we just met in Gran Canaria. And then, years later, I remembered that he was coding, he was in tech software development. So I called him up, and I was like, “Roberto, can you tell me anything about finding a co-founder? I know you’re currently a co-founder at another startup, but can you tell me anything about how to find this person?”

And he’s like, “Well, what are you doing?”

So I tell him a few things about that, and then he’s like, “Well, let me tell you what I do.”

He tells me, “Well, I’ve done University of California, Santa Barbara math, I’ve done a CFA, I’ve coded for banks mostly.” And back then, he was in a startup very much related to what we do now.

And that was—well, then I think we need to do this together. And fortunately, I was able to convince him; he was on board. So that was quite something.

Adam:
Very, very cool.

Well, as we wrap up, is there anything that you would like to share? How can people find you if they have more questions, if they want to get specifics into maybe some of the technical details that you’re working on? How can somebody get in touch with you?

Konrad:
Yes. I think the first place to get in touch is our website at flisspay.de. That would be F-L-I-S-Z-P-A-Y dot D-E.

And there you will find all the more general information. But also, feel free to reach out to me on LinkedIn. I’m always happy to connect with more builders in the space.

Adam:
Fantastic. And hopefully, we’ll get to run into you in person at a WordCamp or at a CloudFest.

And thank you for sharing this war against credit cards or banks. It’s exciting to see that change is coming—that we don’t just have to necessarily accept what is.

“Well, of course, you have to pay these fees.” There are other options, and more options are coming. And so I’m excited to see the growth in that space.

So, for now, that is it for Woo BizChat. Hope everybody has a great day, and we’ll be seeing you around. Woo.